Fortis Development Group has led the race in establishing Sydney's build-to-rent sector and paving the way for more stable rental housing, launching the construction of 17 new apartments for rental in the eastern suburb of Double Bay.

One of the first purpose-built rental apartments held by a single institutional group in Sydney, the 17 one- and two-bedroom unit "Brentwood" project is at 319 New South Head Road, near the Double Bay Village and Edgecliff train station.

"We have found that housing affordability has forced many buyers to consider long-term rentals as an alternate to home ownership," Fortis director Dan Gallen said.

"We are providing tenants surety and stability by offering long-term lease agreements which allow tenants to still live in their 'dream home' and location of choice. There is minimal vacancy risk to the developer and you have good tenant diversification."

While they are rental products, they are not cheap shoeboxes and will be built with luxury bespoke finishes.

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In keeping with the build-to-rent philosophy of longer tenures for tenants, Fortis will offer two- to three-year leases at Brentwood.

This ties in with the efforts of Property NSW, which on Wednesday released its findings on the benefits of build-to-rent apartments which not only solve the affordability problem in Sydney but also tenancy stability. Property NSW found 50 per cent of renters in Australia move home every two years, the highest proportion in the OECD.

These investors manage the projects like they would hotels, offering top amenities and round-the-clock property management services.

The biggest build-to-rent market in the world is the US. It generates $US163 billion in revenue a year and has more than 500,000 multi-family related companies in the sector, according to Ibisworld.

Advisory group Emerge Capital Partners said an exact value of the market was not available but estimated total assets held by institutional investors to be around $US600 billion.

In Sydney and Melbourne, Australia's most expensive housing markets, the sector is almost negligible.

Build to rent has not been popular in Australia, but high median house prices that are a barrier to many entering the market are prompting a rethink. Fortis previously had a small project at 6 Wolseley Grove, Zetland in Sydney's inner south in 2015.

The largest apartment developer in Australia, Meriton has always leased surplus apartments.

But for Fortis, with depreciation deductions from holding new apartments, a zero vacancy factor - reasonable for Double Bay, which is 4 kilometres from the CBD - and capital growth on the apartments, it was able to come up with a net passing yield, on cost base, of around 7 per cent.

It also considered the dispensation of capital gains tax if the apartments are eventually sold and not having to pay GST if they hold the units for investment for at least five years.

Fortis was also able to get a higher floor space ratio through planning negotiations with council and fund a majority of the project with equity rather than debt.

"You also have tenant diversification. One tenant departing has minimal impact on income profile," Fortis managing director Charles Mellick said.

Fortis, which mainly focuses on boutique projects in NSW and Victoria, will work with architect MHNDU, interior designers Lawless & Meyerson and landscape architects Wyer & Co on the Brentwood project.